Kadant Details €157M voestalpine BÖHLER Profil Deal, Expects 2026 Dilution as Inventory Clears

Kadant (NYSE:KAI) executives outlined details of the company’s planned acquisition of voestalpine BÖHLER Profil during a conference call led by President and CEO Jeff Powell and Executive Vice President and CFO Michael McKenney.

Target profile and strategic rationale

Powell said voestalpine BÖHLER Profil is based in Bruckbach, Austria, and has operated for more than 150 years. The business manufactures “high-quality precision components” used in “technically challenging applications,” supported by what management described as unique expertise in patented processes and a history of innovation. For fiscal year 2025, the company generated revenue of EUR 51.5 million, according to Powell.

A key attribute for Kadant is that 100% of BÖHLER Profil’s business is in parts and consumables, a stated strategic focus for Kadant. Powell added that Kadant has sourced components from BÖHLER for more than 30 years, including knives used in Kadant’s wood processing businesses, and that BÖHLER has been “instrumental” in helping Kadant develop products and components for those operations. Powell said BÖHLER had been on Kadant’s acquisition target list for more than a decade and that Kadant is familiar with the company’s management team.

Powell also emphasized the target’s “near-net-shaped” manufacturing capabilities, which he said reduce downstream machining and processing and can lower total production costs. In the Q&A, management described BÖHLER’s competitive advantages as stemming from patented processing lines the company developed and built itself, enabling production that is closer to a final component shape and, in some cases, requires “almost nothing” in post-processing.

Transaction terms and financial metrics

McKenney said the purchase price is approximately EUR 157 million, subject to customary adjustments. For the fiscal year ended March 31, 2025, the company generated about EUR 52 million in revenue and approximately EUR 15.6 million of adjusted EBITDA. McKenney said the transaction implies an EBITDA multiple of about 10x; he added that beneficial tax attributes associated with the transaction are worth roughly 1.5 turns on the multiple, bringing the effective multiple to about 8.5x when those attributes are included.

Kadant plans to fund the acquisition primarily through borrowings under its revolving credit facility in Europe. McKenney said Kadant expects its leverage ratio, as defined in its credit agreement, to increase to just above 2 following the closing. Based on that leverage level, the company anticipates an approximately 3.5% borrowing rate for this debt in 2026.

Reporting structure and intercompany revenue dynamics

Powell said BÖHLER Profil will continue operating in its current location as a standalone division within Kadant’s industrial processing reporting segment and will be renamed Kadant Profil GmbH & Co. KG.

McKenney noted that the company is already a “valued supplier” to Kadant businesses, and approximately 45% of BÖHLER Profil’s 2025 revenue came from supplying Kadant operations. Once acquired, sales to Kadant businesses will be treated as intercompany revenue and eliminated from Kadant’s reported revenue. McKenney said that while externally reported revenue will be smaller as a result, Kadant’s gross margin and EBITDA margins are expected to benefit from the combination.

He cautioned that the timing of margin benefits could vary by quarter because profit associated with intercompany sales is not recognized until the product ultimately ships to third-party customers. McKenney added that Kadant businesses will initially fulfill customer shipments using inventory purchased prior to the acquisition closing, meaning Kadant may not immediately consume post-acquisition inventory that would generate intercompany profit recognition.

Near-term dilution expectation and inventory effects

McKenney said the combination of intercompany accounting, the need to work through on-hand inventory, and normal acquisition fair value accounting will make the acquisition dilutive in 2026. He said Kadant will incorporate the acquisition into its 2026 guidance after the closing occurs, but he also noted the company could not comment on fourth-quarter 2025 results or provide 2026 guidance during this transaction-specific call.

In response to analyst questions, McKenney reiterated that Kadant expects to realize the full margin benefit from the acquired business, but recognition will be delayed while Kadant works through existing inventory. He characterized inventory turns as “quick” given the parts-and-consumables nature of the business, but said it may take “a good part of 2026” and “a few quarters” to work through inventory on hand.

End markets, growth, and customer relationships

Management said the business serves a broad mix of end markets beyond Kadant, including aviation, automotive, and industrial machinery. Powell noted that after Kadant’s portion of sales, the remaining customer base is “pretty diverse,” and he did not identify any single market representing 20% to 30% of revenue. When asked about aviation components, Powell said the company makes certain turbine engine components such as stators, but not turbine blades.

Powell also addressed whether the company sells to Kadant competitors, saying it would continue to supply the industry broadly and that Kadant has other divisions that sell to competitors as well. On growth, Powell said BÖHLER Profil has grown in the “8% range” over the last two years and about 10% over the past five years, adding that Kadant modeled the business conservatively and did not assume high-single-digit growth.

Powell said bringing the supplier in-house reduces risk for some Kadant divisions that had become dependent on BÖHLER’s patented processes, which he described as difficult to source elsewhere. He added that Kadant intends to integrate the acquired business into its global direct sales network and pursue opportunities to expand sales outside of Kadant as well as deepen penetration across Kadant’s divisions.

About Kadant (NYSE:KAI)

Kadant Inc, headquartered in Westford, Massachusetts, is a global supplier of high‐value, critical components and engineered systems for the pulp and paper industry and other process industries. The company’s product portfolio spans stock preparation technologies, refiners and pulpers, fluid handling systems, and web‐handling equipment designed to optimize the efficiency and quality of paper production. In addition to capital equipment, Kadant offers aftermarket services, including spare parts, maintenance programs and process optimization consulting, which together support long‐term customer productivity and reliability.

Originally part of a larger industrial conglomerate, Kadant was established as an independent public company in 1991.